While our Finance Minister enjoys the Games, our living costs are high jumping and too many Kiwis are tripping on the hurdles

Deputy  Prime  Minister  Grant Robertson had  some  fun  last  week  at  the  expense  of  National  leader  Christopher Luxon  for  holidaying  in Hawaii  while  a  Facebook entry  indicated  he  was in  Te  Puke.

This  week  Robertson  is  relishing the  spectacle of  the  Commonwealth  Games, and  the   achievements  of  New Zealand’s  sports stars.

He  may  even  succeed  in  forgetting,  at  least  for  a  short  while,  the  economic  mess that is mounting in  NZ – not  that   he  will   concede  he  has  had anything  to  do  with   inflation  breaking  into a  gold-medal-winning gallop  on his  watch.

Moreover, he  keeps  insisting it  has  already  past  its  prime.

Only  last  week  he  was  telling  his  acolytes  in  Parliament that  while the  government is acutely aware that many New Zealanders are doing it tough,

“… we are taking action to support them.

“We’ve boosted the incomes of seniors, students in low-income families, while a million New Zealanders are receiving the winter energy payment. From next Monday, the targeted cost of living payment will deliver around $27 a week for low and middle income New Zealanders aged 18 years and over who don’t get the winter energy payment.

“In response to high fuel prices, which have been significantly driven by the war in the Ukraine, we have cut the fuel excise duty and road-user charges and halved public transport costs.

Poverty and pessimism – slump in consumer confidence brings more unpalatable news to Robertson and the Govt

When the  country’s  newspapers devote  their  cover  pages  to  advertisements  captioned “The  cost  living crisis”, it’s not something  that  makes palatable  reading  for  government ministers.

When the advertisements come from an organisation like Kidscan, appealing for donations “to make sure children in poverty get the food they urgently need this  winter”, those ministers may well choke on  their morning lattes.

Prime Minister Jacinda  Ardern  has  other  weighty  issues  on  her  mind – at least for now – as  she  prepares to fly off  to  Europe to  talk  trade  in  Brussels with the  EU and  security in  Madrid   with  NATO.

But  for deputy Prime  Minister Grant Robertson,  left  to  mind the  shop while she is away, the media’s highlighting of a cost-of-living crisis and the persistent challenge of child poverty could  dampen  his normally  cheery  optimism on  the  state  of  the  economy.

Yet  another  dampener would be the latest Westpac McDermott Miller Consumer Confidence Survey, which has  recorded the lowest reading on NZ consumer confidence since the survey began in 1988.

Latest food price figures reinforce the economic-performance criticisms Opposition can fling at the Govt

“America’s next downturn  may have a mild flavour—but a bitter aftertaste”.  So  ran a headline in The Economist.

Juxtapose that to New Zealand, and  we  could be  served  a  double dose  of the bitter  aftertaste.

The  problem  here is  that the  authorities apparently didn’t  see it  coming and  now,  as  it  arrives, they could  be  slow  out of  the blocks in dealing  with it.

Prime Minister Jacinda Ardern kept  denying  there was a  cost-of-living  “crisis”.

After its impact nevertheless could be seen to be hitting  home, the Finance Minister  tacked on  to the  budget  some  measures he  hoped  would assuage  any  pain being  felt by  New Zealanders — although  the  queues  at  foodbanks  were already  lengthening.

The latest food price index shows a 0.7% increase in food prices for the month of May.  Food now costs 8.9% more than at the time of the last election and fruit and veges cost 16% more.

That  has  given Opposition parties a  free  hit  at the  expense of the governing party.

Robertson tackles the cost-of-living crisis which the PM did not recognise – now let’s see if he can steer clear of recession

Prime  Minister Jacinda  Ardern  early in March  insisted  there was  no  cost-of-living “crisis”  in New  Zealand. Now  her  right-hand  man, Grant Robertson,  has presented  a  budget which he  proudly  claims  deals  with that  very  same “crisis”, giving  away $1 billion in an emergency cost-of-living  package.

About 2.1 million New Zealanders will get a $350  payment spread  over  three months, while fuel tax  cuts  and half-price  public  transport continue  for  another two  months.

Will  that  be enough  to relieve those  suffering  in what Labour now  accepts   is a crisis?  And  will  it  halt  Labour’s  slide  in  the  polls.

On  that,  opinions  are mixed, with Labour’s  partner  in government  being the most  expressive  in  their  doubts.  Here’s what a Green Party press statement had  to  say  on the  subject:

Why several Labour MPs (whose futures are in electoral jeopardy) will be hoping for miracles in this year’s Budget

Finance Minister Grant Robertson managed  to  put  a  bold  face on  his  fiscal management  last week  when he  presented  the  latest set of Crown accounts, saying they   “are continuing to reflect the strong position New Zealand is in to manage the challenging global environment”.

Tax revenue in the  nine months  to March  was $2.7 bn above forecast at $78.6bn, due to better-than-expected corporate profits and a strong jobs market.  This was partly offset by lower GST returns.

Core Crown expenses were close to forecast at $92.6bn.

The operating balance before gains and losses (OBEGAL) deficit was $8.1bn, $4.1bn  below that forecast in December’s Half Year Economic and Fiscal Update.

Robertson commented approvingly:

“This result shows the strong position New Zealand finds itself in, despite the uncertainty and volatility of the Ukraine war, the pandemic and ongoing supply chain disruptions in critical trading hubs like China. It is further evidence that our strong health response has been the right one for the economy”.

Robertson concedes there are significant challenges for families and business right now.

Cost of living accounts for some (maybe much) of the shrinkage in support for Labour – but is co-governance a factor, too?

Latest  polling  has  underlined  how  support  for the  government has  eroded  almost  as  fast  as inflation has hit  New Zealand  households.

Both polls  have  National  ahead  of  Labour.  The  difference  is  that the Roy Morgan poll (for  the  fifth time  in a  row)  points to  a  change of  a government  while  the  Newshub-Reid  Research sampling   has  National  only two  points  ahead  of  Labour.

This means that  even with  ACT’s  support, the Nats are still  trailing  parties  of the  Left.

But what stands  out  starkly in  both polls is  how  far Labour’s  support  has  fallen since  it  swept  the  deck in the  last  election.

Equally,  the  polling  underlines  how  well Christopher  Luxon  has  done in  re-energising National  since  he  took  on the  leadership, despite  his  relative inexperience in Parliament and  the  critical exposure   he  gets in  the  state-subsidised  mainstream media.

Here are  the  details  of  the two  poll results  (as  reported  by that expert pollster David  Farrar):

Overseas forces are to blame for the surge in our living costs? But non-tradables inflation (up 6 per cent) then must be explained…

In the wake of the latest inflation figures being published today, showing the consumers price index has risen at its fastest pace in some 30 years, the burning question is whether we  have  a  cost  of  living  crisis.

Opposition  parties  (inevitably) seized on the annual 6.9 per cent CPI increase to insist prices  are  out of  control.  National Party leader  Christopher  Luxon says prices   are  a  “silent  thief in  your  pocket”.

On  the other side  of  the political fence, the  Council of Trade Unions contends that inflation  is  being  driven by the price  of  property  and  the  price  of  fuel.

The man who is  running the economy accepts  no  responsibility.   Finance  Minister Grant  Robertson   says  the increases in consumer prices are a “reminder of the current global economic challenges” – but he  adds, almost as an afterthought, they  do  show the need for responsible fiscal policy in New Zealand.

Whatever the huffing and puffing politically, the  hard  fact  is that a  New  Zealander  who  took out  a  30-year  mortgage a  year  ago fixed  for  a  year and  who is  now  looking  to refix could  find  monthly  payments  go  up a formidable 33 per cent.

Buzz from the Beehive – it’s April 1 and billions more will flow in benefit boosts, superannuation rises, and so on…

Ministerial announcements are braying about April 1 triggering a great outflow of money, or the prospect of a great outflow, from the Government’s coffers.

It sounds like most of us will get a slice of the action, although in some cases this action perhaps will amount to no more than furnishing Inland Revenue with our annual returns and coughing up our dues.

Some ministerial announcements, true, concerned comparatively small sums.   

But two separate press statements – one from the PM – drew public attention to the transfers of huge sums of money from the Government  to families, welfare beneficiaries, superannuitants and so on.

The message, palpably, was that Jacinda and her team are aware of the squeeze on the cost of living, but they care deeply for our wellbeing and are determined to ease the burden.

The PM highlighted these effects:

Bigger benefits from tomorrow – bravo! But they might not buy as much as before

Ministers  have been celebrating  their  wisdom in raising  benefits  substantially from  April 1.

Social Development Minister Carmel Sepuloni led  the  chorus by  telling Parliament it is the biggest lift to main benefits in decades.  For many years, the rate of main benefits has fallen further behind the average wage, placing  many people, including children, in undue hardship, she said.

That  was  an unusual admission, given the  Labour  Party has been in office  for  four years.

So  now  the  good  news:

“In addition to indexing main benefits to wage growth, we are further lifting main benefits so they don’t fall further behind. The Ministry of Social Development’s analysis shows that from 1 April, a couple on a benefit with children will now be, on average, $237 a week better off than they were when the Government took office in 2017.

“As a Government, we have worked hard to lift as many children out of poverty as possible, and while raising the level of main benefit is only one way to achieve our goal, it is an incredibly important step in the right direction”.

Promoting well-being in this year’s Budget (and avoiding an inflationary cycle) will be challenging for Robertson

Budget  Day  is  now  seven weeks  away  and  lobby   groups  are  hammering  on  the Finance  Minister’s  door    for  the  relief   they believe they need, deserve, and which is  their  right.

The Save the  Children lobby group issued  a  press  statement this week saying:

“The  grim reality is many families are continuing to try to make do without life’s essentials such as healthy food, warm homes or access to health care”.

Advocacy and Research Director Jacqui Southey says while the child rights organisation is supportive of the lift in core benefits that will come into force later this week  these “small lifts” will not cover the steep rise in the current cost of living.

“Economic modelling on adequate benefit levels released by the Fairer Futures Coalition clearly shows that even with the new increase, benefit levels fall well short of covering the basic cost of living.

“It is essential that every New Zealander can attain their right to a decent standard of living and incomes levels are critical to achieving this. “Families on the lowest incomes are so stretched they do not have the luxury of cost cutting to make ends meet”.